First off, investments can be only made in any country that is marked "Allied."

Second, investments can be made mutiple times by simply visting another port and going back to said city.

Next, Investments reveal upgrades only you can see! Thats right, investments in home country and other countries reveal upgrades at the Shop Keeper and Craftsman, like new clothes and books, etc.. also, development status is a combined effort of all investors, revealing upgrades for everybody. This is the reason that when you go to seville you can build really nice ships.

Lastly, investing gives you lots of trade fame and the amount you can invest increases each time you invest a certain amount of money. You can also get court ranks by investing and a nice book (depending on home city) at 1 million investment!

I would always encourage anyone to invest in the town he or she frequents the most. When you are beginning, there is little reason to invest; but eventually start your investing with 20% of your equity.